By Tariro Mzezewa
NEW YORK (Reuters) - The S&P 500 will likely snap out of its tight trading range in the second half of 2015 to end almost 7 percent higher for the year, according to a Reuters poll.
Market reaction to higher interest rates and the response to whether Greece defaults on its debt were cited by many as the main market catalysts for the rest of this year.
The median forecast of nearly 50 strategists polled by Reuters in the past week showed the S&P 500 (SPX) rising to 2,202 by year-end.
The target, which is slightly above the median forecast in a poll in March, would represent a 5 percent gain from Friday's close of 2,101.49 and a 7 percent increase from its 2014 close.
While the Federal Reserve is expected to raise interest rates for the first time in almost a decade in the coming months, many strategists think its approach will be measured, allowing stocks to keep moving higher.
"We would expect the Fed will have less effect than most people think. The economy seems likely to continue its sluggish growth trajectory, which will make the Fed more cautious," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio.
Strategists see the benchmark index reaching 2,300 in a year. The S&P has posted double-digit percentage gains in five of the past six years.
The poll was conducted during a week when Greece was still locked in negotiations with its international creditors. Those talks yielded no deal, leaving Athens facing a looming default and possible exit from the euro.
But even if it does default, markets may not be dramatically affected, some strategists said.
"Greece has the potential to create volatility in capital markets, but we believe the ECB is far better equipped to handle this situation today than it was just a few years ago," said Kristina Hooper, U.S. investment strategist at Allianz (XETRA:ALVG) Global Investors in New York.
"That's because the ECB has more credibility and there is less chance of contagion as countries like Spain are experiencing an improving economy."
The Dow Jones Industrial Average (DJI) is expected to rise to 19,000 by year end up, around 6 percent from Friday's close of 17,946.68.
Many strategists said they favor economically sensitive sectors including financials, consumer discretionary, healthcare and technology.